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Source: http://www.dougsimpson.com/blog/archives/000112.html November 23, 2009

Unintended Consequences Doug Simpson's weblog of research on the collision of law, networks and disruptive technologies. Misuse of Copyright Doctrine Independent of Antitrust Law September 14, 2003 One need not turn to antitrust law to address the questions posed in RIAA v. P2P Net: Notes in the Key of Antitrust. One may also examine RIAA's assaults on P2P networks through the lens of "misuse of copyright." (Read more ...) Professor Gifford's analysis of the interface between intellectual property and antitrust law concludes that courts will migrate to the Federal Circuit's view, that "exercise of intellectual property rights cannot violate the antitrust laws." Id. p. 414. He admonishes, however, that the intellectual property laws themselves contain strictures against rights holders' misuse of such rights. Copyright misuse was found to be a valid affirmative defense in Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990). Lasercomb held copyrights on certain CAD/CAM software, which it licensed to others. Its usual license agreement purported to preclude licensees from creating their own competing CAD/CAM software. Lasercomb sued Reynolds for copyright infringement, and Reynolds claimed that Lasercomb was attempting to use its copyright to control competition in an area outside the copyright: the use of CAD/CAM in Reynolds' industry. The Lasercomb Court reviewed the history of patent and copyright law and noted the recognition of the equitable defense of "misuse of patent" in Morton Salt v. G.S. Suppiger, 314 U.S. 488 (1942). While the Lasercomb Court found no comparable Supreme Court decision relating to misuse of copyright, "since copyright and patent law serve parallel public interests, a 'misuse' defense should apply to infringement actions brought to vindicate either right." 911 F.2d 970, 976. The Court of Appeals rejected the application of the antitrust law's "rule of reason" to Lasercomb's behavior. "So while it is true that the attempted use of a copyright to violate antitrust law probably would give rise to a misuse of copyright defense, the converse is not necessarily true -- a misuse need not be a violation of antitrust law in order to comprise an equitable defense to an infringement action. The question is not whether the copyright is being used in a manner violative of antitrust law (such as whether the licensing agreement is 'reasonable'), but whether the copyright is being used in a manner violative of the public policy embodied in the grant of a copyright." 911 F.2d at 978. Further, the Lasercomb Court found that the challenger need not have agreed to the restrictive license terms; "the defense of copyright misuse is available even if the defendants themselves have not been injured by the misuse." 911 F.2d at 978. Since 1990, the doctrine of copyright misuse has been adopted in several circuits in addition to the Fourth. See Alcatel USA, Inc. v. DGI Techs., Inc. , 166 F.3d 772 (5th Cir. 1999); Practice Management Info. Co. v. AMA , 121 F.3d 516 (9th Cir. 1997). See also Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994). The Federal Circuit has also acknowledged the availability of the doctrine in some circumstances. In re Independent Service Organizations Antitrust Litigation. 203 F.3d 1322 (Fed. Cir. 2000), cert. denied 531 U.S. 1143 (2001). When sued by A&M Records for copyright infringement, Napster, Inc. alleged that plaintiffs colluded to extend their copyright monopoly to include online distribution. The Ninth Circuit concluded that the bundle of copyrights include the right, within broad limits, to curb the development of such a derivative market. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). The Court also declined Napster's invitation that it impose compulsory royalties: "Plaintiffs would lose the power to control their intellectual property: they could not make a business decision not to license their property to Napster, and, in the event they planned to do business with Napster, compulsory royalties would take away the copyright holders' ability to negotiate the terms of any contractual arrangement." 239 F.3d 1004, ____. Comments and TrackBack, please ... DougSimpson.com/blog Posted by dougsimpson at September 14, 2003 08:46 AM ncs